It doesn’t seem to be the best of time for investors to invest in real estate, especially those focused on short-term gains. However, those who have a sufficiently broad investment horizon of 4-5 years and can read the current and future market signals correctly should see sense in investing now, as prices have bottomed out and can only go upward from here, feels Anuj Puri, Chairman, ANAROCK Property Consultants. In an exclusive interview with Sanjeev Sinha, Puri talks about the realty market, impact of policy reforms on it and shares his outlook. Excerpts:
RERA and GST were supposed to transform real estate in India. After one year of their roll-out, what has changed really?
RERA has had a massive impact on both buyers and developers in the states where it has been implemented in the intended manner. Given the determination of the Centre, its nation-wide deployment is only a matter of time. Developers as well as brokers are aware that they now have to toe the line and conduct their business responsibly, and buyers know that they have a strong rederessal system to rely on. GST has not had much of an impact, but that is probably because it is still work in progress. Definitely, it has made a clear dividing line between ready-to-move and under-construction properties, with the former having escaped its ambit. There are still many lacunae which need to be ironed out. However, it will eventually serve the same purpose as RERA, and that is to render the real estate industry more transparent and accountable.
When do you think real estate will come out of the woods and start reviving?
We are already witnessing the green shoots of market revival, but there is no doubt that the revival will be gradual and that it will happen in stages. As such, there is no clear timeline one can attribute for a full-fledged revival, which also depends on unpredictable factors such as new government policies, stock market performance and buyer sentiment. However, we should see a satisfactory degree of recovery within the next 12-18 months.
Is it the right time to invest in real estate, or homebuyers and investors should wait for some more time?
It is not the best of time for investors, especially those focused on short-term gains. Investors who have a sufficiently broad investment horizon of 4-5 years and can read the current and future market signals correctly will see sense in investing now, as prices have bottomed out and can only go upward from here. For end-users, it is an optimal time to make purchase decisions. Not only are prices as low as they’re going to get, but developers are also quite open to further negotiation and are offering attractive incentives and financing schemes throughout the year. Also, there is a very generous supply of ready-to-move homes available in most cities, at prices which would have been unheard-of in the past when it comes to the instant gratification of moving in immediately.
What is more risk-free at this time – ready-to-move-in homes or under-construction property?
Ready-to-move properties are obviously the least risky as there are no potential issues with delays in possession, altered development plans or other possible setbacks. What you see is what you get – immediately. On the other hand, under-construction flats by reputed, RERA-registered builders are also attractive in that they come at lower prices. However, the key terms here are ‘reputed’ and ‘RERA-registered’. Under-construction properties in states where RERA is not yet a powerful market force are still risky propositions.
Do you think buying second home is still profitable for investors or should they avoid buying it – at least till the market revives?
It all depends on one’s investment horizon. If one has the patience to buy now, wait for five or more years before considering resale and is happy with earning rental income in the meantime, now is a very good time to invest in a second home. For end-users, second homes are also an attractive proposition because of the rationalized pricing in most cities.
Where do you see real estate and the property market in India, say, after 10 years hence?
In 10 years’ time, Indian real estate should be on par with some of the more organized developing countries – but it will still not match up to the most developed and organized markets of the world. This is because a lot of what has already been done in the past cannot be undone – disorganized urban sprawl, lack of infrastructure in the core parts of our cities, and a continuing social divide which does have an impact on the real estate market.
Do you feel that Indians are still as interested in buying homes as they were before, as opposed to renting?
Real estate is something which is close to the heart of most Indians. At some point, we all want to buy or sell a property. The reasons could be emotional and investment-driven, and often both. For a long time, we’ve been saying that every Indian wants to buy their own home at some point. I have heard a different tune being sung by the younger generations for quite a few years now – that renting a home is a smarter choice than buying one. Well, all I can say is wait till you hit middle age, and let’s discuss it again then. Our priorities in life change as we get older. If they didn’t, then Indian real estate would be a pure renting market, and that’s not going to happen.